Question 1

Distinguish between demand and quantity demanded. Do the same for supply and quantity supplied.

Accepted Answer

Quantity demanded is the number of units

Question 2

Black markets are frequent occurrence in markets with price ceilings.

Accepted Answer

A) True 
 B)False

Question 3

Which price in Figure 4-21 is equilibrium?

Accepted Answer

A)  P  1  
B)  P  2  
C)  P  3  
D)  There is no equilibrium price in the diagram. 
A)  P  1  
B)  P  2  
C)  P  3  
D)  There is no equilibrium price in the diagram.

Question 4

Sugar price supports primarily benefit consumers.

Accepted Answer

A) True 
 B)False

Question 5

Give an example of a price floor. Draw a corresponding diagram and explain why there is a continuing surplus.

Accepted Answer

The example used in the text is price su

Question 6

A demand curve shows the relationship between price and quantity demanded only so long as all other things are held constant.

Accepted Answer

A) True 
 B)False

Question 7

Demand and quantity demanded are the same thing.

Accepted Answer

A) True 
 B)False

Question 8

Cost-reducing technological advancements allow suppliers to earn more profits but have no noticeable effect on the supply curve.

Accepted Answer

A) True 
 B)False

Question 9

Equilibrium in a market is

Accepted Answer

A)  a situation in which there are no inherent forces that produce change. 
B)  the natural state of affairs in the market. 
C)  the actual price and quantity that will exist in a market. 
D)  the best price and quantity that can exist in a market. 
E)  All of these responses are correct. 
A)  a situation in which there are no inherent forces that produce change. 
B)  the natural state of affairs in the market. 
C)  the actual price and quantity that will exist in a market. 
D)  the best price and quantity that can exist in a market. 
E)  All of these responses are correct.

Question 10

Along a supply curve,

Accepted Answer

A)  supply changes as price changes. 
B)  quantity supplied changes as price changes. 
C)  supply changes as technology changes. 
D)  quantity supplied changes as technology changes. 
A)  supply changes as price changes. 
B)  quantity supplied changes as price changes. 
C)  supply changes as technology changes. 
D)  quantity supplied changes as technology changes.

Question 11

Suppose demand can be described with the equation Q = 900 − 5P and supply with the equation Q = 100 + 5P. 
a. Determine the equilibrium price and quantity. 
b. Determine the surplus or shortage if the price were $100.

Accepted Answer

a. Equate the supply and demand as follo

Question 12

Explain the effect of the following changes on equilibrium price and quantity of a commodity: 
(a) increase in average incomes. 
(b) increase in population.

Accepted Answer

If average incomes rise, consumers will

Question 13

The imposition of price ceilings on a market often results in

Accepted Answer

A)  an increase in investment in the industry. 
B)  a persistent surplus in the market. 
C)  the diversion of income toward black-market suppliers. 
D)  lower prices being offered on the black market. 
A)  an increase in investment in the industry. 
B)  a persistent surplus in the market. 
C)  the diversion of income toward black-market suppliers. 
D)  lower prices being offered on the black market.

Question 14

Which of the following is an example of a price floor?

Accepted Answer

A)  Rent controls 
B)  Maximum prices for gasoline 
C)  Usury laws that set maximum interest rates 
D)  The minimum wage 
A)  Rent controls 
B)  Maximum prices for gasoline 
C)  Usury laws that set maximum interest rates 
D)  The minimum wage

Question 15

Some hotels in Myrtle Beach, South Carolina charge over $200 a night in the summer but sometimes as little as $99 a night in the winter. Use supply and demand analysis, including graphical and verbal explanation, for these winter "sales."

Accepted Answer

A sample graph is shown (Figure 4-26). D

Question 16

Assume that Figure 4-16 shows the supply of new houses. An improvement in the technology for building houses will shift supply from

Accepted Answer

A)  S  1  to S  2  . 
B)  S  2  to S  1  . 
C)  S  3  to S  2  . 
D)  S  3  to S  1  . 
A)  S  1  to S  2  . 
B)  S  2  to S  1  . 
C)  S  3  to S  2  . 
D)  S  3  to S  1  .

Question 17

In Figure 4-16, an increase in the number of producers will shift supply from

Accepted Answer

A)  S  1  to S  2  . 
B)  S  2  to S  1  . 
C)  S  3  to S  2  . 
D)  S  3  to S  1  . 
A)  S  1  to S  2  . 
B)  S  2  to S  1  . 
C)  S  3  to S  2  . 
D)  S  3  to S  1  .

Question 18

Relative to the prices that would be observed in an uncontrolled market, prices charged in a black market are generally

Accepted Answer

A)  lower, since sellers have trouble locating buyers. 
B)  lower, since buyers have trouble locating sellers. 
C)  higher, since black market sellers compensate for the risk of being caught. 
D)  higher, since most buyers enjoy goods more if they are illegal. 
A)  lower, since sellers have trouble locating buyers. 
B)  lower, since buyers have trouble locating sellers. 
C)  higher, since black market sellers compensate for the risk of being caught. 
D)  higher, since most buyers enjoy goods more if they are illegal.

Question 19

One effect of market intervention is resource misallocation.

Accepted Answer

A) True 
 B)False

Question 20

An important assumption made when constructing a demand curve is that

Accepted Answer

A)  only price and quantity matter in determining the demand for a good. 
B)  people always want a certain amount of the good. 
C)  demand is always dependent on the supply of a good. 
D)  all other determinants of demand are held constant. 
E)  the demand curve has a positive slope. 
A)  only price and quantity matter in determining the demand for a good. 
B)  people always want a certain amount of the good. 
C)  demand is always dependent on the supply of a good. 
D)  all other determinants of demand are held constant. 
E)  the demand curve has a positive slope.

Exam 4: Supply and Demand: an Initial Look

Distinguish between demand and quantity demanded. Do the same for supply and quantity supplied.

Black markets are frequent occurrence in markets with price ceilings.

Which price in Figure 4-21 is equilibrium?

Sugar price supports primarily benefit consumers.

Give an example of a price floor. Draw a corresponding diagram and explain why there is a continuing surplus.

A demand curve shows the relationship between price and quantity demanded only so long as all other things are held constant.

Demand and quantity demanded are the same thing.

Cost-reducing technological advancements allow suppliers to earn more profits but have no noticeable effect on the supply curve.

Equilibrium in a market is

Along a supply curve,

Suppose demand can be described with the equation Q = 900 − 5P and supply with the equation Q = 100 + 5P. a. Determine the equilibrium price and quantity. b. Determine the surplus or shortage if the price were $100.

Explain the effect of the following changes on equilibrium price and quantity of a commodity: (a) increase in average incomes. (b) increase in population.

The imposition of price ceilings on a market often results in

Which of the following is an example of a price floor?

Some hotels in Myrtle Beach, South Carolina charge over $200 a night in the summer but sometimes as little as $99 a night in the winter. Use supply and demand analysis, including graphical and verbal explanation, for these winter "sales."

Assume that Figure 4-16 shows the supply of new houses. An improvement in the technology for building houses will shift supply from

In Figure 4-16, an increase in the number of producers will shift supply from

Relative to the prices that would be observed in an uncontrolled market, prices charged in a black market are generally

One effect of market intervention is resource misallocation.

An important assumption made when constructing a demand curve is that

What Is Economics

The Economy: Myth and Reality

The Fundamental Economic Problem: Scarcity and Choice

An Introduction to Macroeconomics

The Goals of Macroeconomic Policy

Economic Growth: Theory and Policy

Aggregate Demand and the Powerful Consumer

Demand-Side Equilibrium: Unemployment or Inflation

Bringing in the Supply Side: Unemployment and Inflation

Managing Aggregate Demand: Fiscal Policy

Money and the Banking System

Monetary Policy: Conventional and Unconventional

The Financial Crisis and the Great Recession

The Debate Over Monetary and Fiscal Policy

Budget Deficits in the Short and Long Run

The Trade-Off Between Inflation and Unemployment

International Trade and Comparative Advantage

The International Monetary System: Order or Disorder

Exchange Rates and the Macroeconomy

Contemporary Issues in the Us Economy

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